Government debt

Public debt as a percent of GDP, evolution for USA, Japan and the main EU economies.

Government debt (also known as public debt,national debt and sovereign debt) is the debt owed by a central government. (In the U.S. and other federal states, "government debt" may also refer to the debt of a state or provincial, municipal or local government.) By contrast, the annual "government deficit" refers to the difference between government receipts and spending in a single year, that is, the increase of debt over a particular year.

In his first years in the White House, Mr. Roosevelt apologized for each annual deficit. Each new budget message explained that, because of unforeseen circumstances, the promise of the previous year had not been met, but next year things would be better; next year there would be a balanced budget…. The 1938 congressional elections were uncomfortably near at hand…. it was announced that the President would deliver a Fireside Chat. In it our startled ears caught the opening accents of a grand new liturgy. Spending would be resumed, but let not the heart be troubled. Spending was no longer the rock of unsound finance on which so many liberal governments had been wrecked; it was not danger, but security. Debt, if owed to ourselves, was not debt but investment.

I have long argued that paying down the national debt is beneficial for the economy: it keeps interest rates lower than they otherwise would be and frees savings to finance increases in the capital stock, thereby boosting productivity and real incomes.

I am for a government rigorously frugal & simple, applying all the possible savings of the public revenue to the discharge of the national debt; and not for a multiplication of officers & salaries merely to make partisans, & for increasing, by every device, the public debt, on the principle of it's being a public blessing.

At the time we were funding our national debt, we heard much about "a public debt being a public blessing"; that the stock representing it was a creation of active capital for the aliment of commerce, manufactures and agriculture.

I wish it were possible to obtain a single amendment to our constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of it's constitution; I mean an additional article, taking from the federal government the power of borrowing.

Such was the origin of that debt which has since become the greatest prodigy that ever perplexed the sagacity and confounded the pride of statesmen and philosophers. At every stage in the growth of that debt the nation has set up the same cry of anguish and despair. At every stage in the growth of that debt it has been seriously asserted by wise men that bankruptcy and ruin were at hand. Yet still the debt went on growing; and still bankruptcy and ruin were as remote as ever.

When I was a youngster growing up in South Dakota, we never referred to the national debt, it was always referred to as the war debt because it stemmed from World War I. Well, what we have now, at least two thirds of it, is the war debt. We're never going to make a substantial cut in that debt until we quit getting into these unnecessary wars.

Our national debt after all is an internal debt owed not only by the Nation but to the Nation. If our children have to pay interest on it they will pay that interest to themselves. A reasonable internal debt will not impoverish our children or put the Nation into bankruptcy.